pass Digital Acquisition (CDAQ) - 2025 Q4 - Annual Report

IPO and Fundraising - The company completed its Initial Public Offering (IPO) on October 19, 2021, raising gross proceeds of $200 million from the sale of 20 million Units at $10.00 per Unit[22]. - A total of $200 million, including $196 million from the IPO and $4 million from a Private Placement, was placed in a Trust Account[24]. - The Initial Public Offering generated gross proceeds of $200 million from the sale of 20,000,000 Units at $10.00 per Unit[167]. - The Private Placement Warrants generated gross proceeds of $7 million from the sale of 4,666,667 Warrants at $1.50 per Warrant[168]. - The Underwriters received a cash underwriting discount of 2.00% of the gross proceeds from the Initial Public Offering, amounting to $4,000,000, and a deferred fee of 3.50%, totaling $7,000,000[209]. - The Underwriters purchased an additional 1,240,488 Over-Allotment Units, generating additional gross proceeds of $12,404,880[208]. Business Combination and Merger Agreement - The company has until April 20, 2026, to complete its initial Business Combination, which is 54 months from the IPO closing date[26]. - The KMC Merger Agreement stipulates a total Merger Consideration of $230 million, to be paid entirely in shares of Pubco common stock valued at $10.00 per share[45]. - The KMC Merger Agreement includes a minimum cash condition of at least $5.0 million at Closing, after accounting for public shareholder redemptions and transaction financing proceeds[52]. - The Voting Agreements cover approximately 20.75% of KMC's outstanding voting securities as of the date of the KMC Merger Agreement[58]. - The Pubco board of directors will consist of five directors, including one designated by the Company and four designated by KMC[51]. - The KMC Merger Agreement is governed by Delaware law, with all actions to be determined exclusively in the Chancery Court of the State of Delaware[57]. - The KMC Merger Agreement does not permit recourse against anyone other than the parties to the agreement[50]. Shareholder Actions and Redemptions - As of October 19, 2023, shareholders redeemed 16,045,860 Public Shares for approximately $169.1 million at a redemption price of about $10.54 per share[30]. - Public Shareholders redeemed 2,713,143 Public Shares for approximately $29.6 million at a redemption price of about $10.92 per share during the 2024 EGM[31]. - Public Shareholders are restricted from redeeming more than 15% of the Public Shares sold in the Initial Public Offering without prior consent, aimed at preventing large block accumulations[94]. - If the initial Business Combination is not completed, Public Shareholders who elected to redeem their shares will not be entitled to redeem for their pro rata share of the Trust Account[99]. - The company has removed the Redemption Limitation, allowing for redemptions that do not cause net tangible assets to fall below $5,000,001[93]. - The company intends to require Public Shareholders to deliver share certificates or electronically transfer shares to exercise redemption rights[92]. Financial Performance and Reporting - As of December 31, 2025, the company reported a net loss of $2,991,929, which included $3,217,619 in loss from operations and $344,811 in interest income from the Trust Account[193]. - For the year ended December 31, 2024, the company had a net loss of $3,545,486, consisting of $5,942,936 loss from operations, offset by $1,928,109 in interest earned on cash held in the Trust Account[194]. - The company had cash in its operating account of $972 as of December 31, 2025, with current liabilities amounting to $9,269,763, resulting in a working capital deficit of $3,086,582[195]. - The company has not generated any operating revenues to date and will not do so until after the completion of its initial Business Combination[192]. - The company is required to file periodic reports with the SEC, including annual and quarterly reports, which will contain audited financial statements[115]. Risks and Challenges - Risks include the potential inability to complete the initial Business Combination and increased competition for attractive targets, which may raise costs or hinder finding a suitable target[124]. - The company may face challenges in completing its initial Business Combination due to potential simultaneous attempts with multiple targets, which could increase costs and risks[125]. - Recent fluctuations in inflation and interest rates could hinder the ability to consummate an initial Business Combination[125]. - The company may not complete its initial Business Combination within the Combination Period, potentially forcing Public Shareholders to wait beyond April 20, 2026 for redemption[127]. - The company is subject to substantial competition for Business Combination opportunities, which may limit its ability to complete an initial Business Combination[126]. Trust Account and Liquidation - The Trust Account was liquidated on October 19, 2023, and funds are now held in an interest-bearing demand deposit account[158]. - The amount in the Trust Account was approximately $11.67 per Public Share as of December 31, 2025[81]. - The Redemption Price in the Trust Account was approximately $11.67 as of December 31, 2025, before taxes and potential claims from creditors[105]. - The company expects to fund costs associated with dissolution from amounts remaining outside the Trust Account, with a potential request for up to $50,000 of accrued interest if necessary[104]. - If bankruptcy occurs, the funds in the Trust Account could be subject to claims from third parties, which may prevent returning $10.00 per share to Public Shareholders[111]. Corporate Structure and Governance - Following the Sponsor Handover on August 31, 2023, the Legacy Sponsor transferred 3,093,036 Founder Shares and 4,645,398 Private Placement Warrants to the new Sponsor[27]. - The company issued 600,000 Class A Ordinary Shares to the Sponsors upon the conversion of an equal number of Class B Ordinary Shares on October 19, 2023[34]. - The company has not paid any cash dividends on its Ordinary Shares to date and does not intend to do so prior to the completion of its initial Business Combination[149]. - The company holds 97.96% of issued and outstanding Ordinary Shares, making it likely to consummate the initial Business Combination without requiring Public Shareholder votes[87]. - The company has no full-time employees and relies on two officers who allocate time as needed until the initial Business Combination is completed[114]. Future Financing and Capital Structure - The company intends to effectuate its initial Business Combination using cash from the proceeds of the Initial Public Offering and Private Placement, as well as other financing methods[64]. - The company may seek to raise additional funds through a private offering of debt or equity securities to complete its initial Business Combination[67]. - The company may issue additional Class A Ordinary Shares or preference shares to complete its initial Business Combination, which could dilute existing shareholders' interests[127]. - The company has agreed to transfer 782,490 Class B Ordinary Shares to certain investors upon the consummation of the Business Combination, with an estimated fair value of $6,025,173 as of December 31, 2025[219]. Accounting and Compliance - The company has identified the valuation of Warrants, Founder Shares, and non-redemption liability as critical accounting estimates[220]. - Compliance obligations under the Sarbanes-Oxley Act may increase the time and costs associated with completing an initial Business Combination[130]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[120]. - The company will remain a smaller reporting company until specific revenue and market value thresholds are exceeded[123].